Unionised workers may be able to negotiate with management for higher wages during periods of economic prosperity. Suppose that workers at automobile assembly plants successfully negotiate a significant increase in their wage package. How would the new wage contract be likely to affect the market supply of new cars?

Supply will shift to the right.

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Supply will shift to the left.

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Supply will not shift, but the quantity of cars produced per month will decrease

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Supply will not shift, but the quantity of cars produced per month will increase.

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Solution

The correct option is B
Supply will shift to the left.

If the cost of resources used to produce a good increases, which will be because of increase in wages in this case, sellers will be less inclined to supply the same quantity at a given price, and the supply curve will shift to the left.

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Q. When decrease in demand is equal to increase in supply, equilibrium quantity will ___________.

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The correct option is B Supply will shift to the left. If the cost of resources used to produce a good increases, which will be because of increase in wages in this case, sellers will be less inclined to supply the same quantity at a given price, and the supply curve will shift to the left.

The correct option is B
Supply will shift to the left.

If the cost of resources used to produce a good increases, which will be because of increase in wages in this case, sellers will be less inclined to supply the same quantity at a given price, and the supply curve will shift to the left.